Question 2 The following trial balance has been provided for the Williams business for the year ending 31st December 2020. Items DR (E) CR (E) Machinery 150,500 Drawings 2.980 Bank 50,200 1,390,015 Capital Allowance for doubtful debts 1,540 Returns in 3,500 Cash 4,600 32,400 6,050 505 2,360 66,400 Loan 5% per annum Returns Out Accumulated Depreciation - Machinery Bad Debts Salaries Accounts Receivable Mortgage Accounts Payable Sales Carriage in 42,000 454,000 8,600 460,000 1,840 Insurance 800 Purchases 134,800 134,800 Purchases Accumulated Depreciation - Premises 20,500 37,700 1,870,000 1,980 Opening Inventory Premises Carriage Out Loan Interest Rent Received Electricity TOTALS 1,350 6,200 8,800 2,379,810 2,379,810 End of Year Adjustments The closing inventory at 31st Dec 2020 is 20,200. The premises are to be depreciated at 3% straight line method. The machinery is to be depreciated at 896 reducing balance method. The Insurance is pre-paid 390. Salaries amounting to 2,320 are owing, to be accrued. The interest rate on the loan for the year is 5 % per year. There are 2 months owing on the loan interest, to be accrued. The allowance for doubtful debts is set at 13% of accounts receivable. It is advised that you draw up an Income Statement and a Balance Sheet from the information given above in order to answer the following questions. Answer the following regarding the Income Statement: 2.1) What are the net sales? 2.2) What is the cost of goods sold? 2.3) What is the Gross Profit? 2.4) What is the total revenues (excluding sales)? 2.5) What is the depreciation expense for the premises this year? 2.6) What is the depreciation expense for the machinery this year? 2.7) What is the Insurance expense for the Income Statement? 2.8) What is the salaries expense for the Income Statement? 2.9) What is the loan interest expense for the Income Statement? 2.10) What is the allowance for doubtful debts for the income statement? 2.11) Is the allowance for doubtful debts an expense or a revenue in this case? 2.12) What are the total expenses? 2.13) What is the net profit recorded by the company for 2020? Answer the following regarding the Balance Sheet: 2.14) What is the Accumulated Depreciation on the premises to be reported in the Balance Sheet? 2.15) What is the Accumulated Depreciation on the machinery to be reported in the Balance Sheet? 2.16) What is the total value of the fixed assests to be reported in the Balance Sheet? 2.17) What is the value of the accounts receivable to be reported after the allowance for doubtful debts has been considered? 2.18) What is the total of the pre-paid assets to be recorded in the current assets? 2.19) What is the total for the current assets? 2.20) What is the total of the accrued expenses to be recorded in the current liabilities? 2.21) What is the total for the current liabilities? 2.22) What are the net assets? 2.22) What are the net assets? 2.23) What is the re-calculated capital
